As fintech startups try to onboard merchants faster than competition, theyre mostly conducting only the basic checks prescribed by the RBI and skipping enhanced due diligence which could help keep fraudsters away. Large payment companies are approaching KYC more as a security checklist — perhaps for cost considerations — than a monitorable mandate by the RBI.
OnGrid, AuthBridge, IDfy and BetterPlace are among the background check service providers that said there has been a sharp increase in mandates as background checks and employee verification - once confined to conventional sectors like IT and banking - extends its reach across e-commerce, transportation, logistics, retail and healthcare, among others.
Industry insiders and startup founders pointed out that the KYC (know your customer) issues around Paytm Payments Bank might not be unique to one company; many startups end up taking shortcuts to onboard customers quickly. And once a company grows in size, managing risk and compliance becomes a big challenge.